The personal blog of Reyn Bowman, a Durham NC resident, 40-year veteran of community-destination marketing and still an explorer in community sense-of-place. Opinions expressed here are those of the author.

Friday, July 25, 2014

Durham Could Become Detroit If It Doesn’t Adapt

While the author often jumps from metro areas to multi-metro consolidated statistical areas in search of data without distinguishing, it is clear Berkley economics researcher Dr. Enrico Moretti finds Durham one of a handful of centers of innovation.

But the book is more than that. It is an excellent primer to remind policy makers what is and isn’t economic development and why. It also pinpoints how some cities avoid decline while others don’t.

They continually and strategically economically adapt.

Detroit was once like Durham is today, a center for research, technology and innovation but it became complacent and peaked in 1950. Instead of patting themselves on the back, Durham leaders should be running scared.

The community is where it is today because it has economically adapted at least four different times during its history, five or six if you count transitions by Native Americans here. That this is an almost temporal part of its personality is no guarantee.

Most communities. such as nearby Raleigh, another emerging innovation center, have been lucky to do it once.

When one examines Durham’s economic transitions, they were both gradual and farsighted but each took root long before its then-current economy peaked.

Durham’s status as a center of innovation today is rooted in a time more than a hundred years ago when it was a bustling center for tobacco and textile manufacturing, fifty years before they would dissipate and nearly ninety years before they would disappear.

Architects for new developments around the historic American Tobacco Complex elected to ignore truly historic elements dating back more than a century and emulate instead a building erected in the 1950s.

Those erected by the City ignored even that, defying its own design guidelines.

American Tobacco’s founders, though, began re-thinking Durham’s economic future a little more than 20 years after the final addition to the Old Bull Building was completed in the 1880s (now a National Landmark, it dates to 1874.)

This strategic foresight began to evolve just before the far more distinctive Neo-Romanesque portion was erected in 1900, also reflected in several other thriving historic districts such as Brightleaf.

These historic buildings and more than a million square feet of others of that vintage or earlier are filled with innovation workers today. But the foundations of that transition were laid in 1892 when Durham’s tobacco and textile generation facilitated the relocation of Trinity College here.

The school was transitioning to the German university model with an emphasis on research over recitation. This was less than two decades after Durham’s adaptation from agriculture to manufacturing. Within a decade, seeds for the next adaptation were already being sown.

In 1907, Republican President Theodore Roosevelt moved to break up the massive Duke trust, one of two forged by Durham natives, one tobacco and the other fertilizer created from tobacco byproducts.

Its fall from grace began because of its complete monopoly of licorice, a flavoring used in tobacco.

Two years earlier his father, Washington Duke, had died just as J.B. Duke was founding The Southern Power Company, an entrepreneurial endeavor to help North Carolina adapt economically. It’s now known as Duke Energy.

He would fight the breakup of his tobacco trust all the way to the Supreme Court four years later, but I think he had already seen the “writing on the wall” based on breakups of similar trusts.

In spite of their differences with Roosevelt, both father and son were also ardent Republicans, subscribing during its last few years to a wing committed to the downtrodden.

After breaking up his trust on behalf of the government, J.B. Duke walked away from tobacco for good just as the Republican and Democratic parties traded places on the issue of social justice during the election of 1912.

Roosevelt didn’t break up the Republican Party. In fact he won every presidential primary but one that year.

But the party’s Wall Street wing used backroom tactics to block his nomination anyway, leaving the social justice wing no choice but to follow Teddy to a third party and to finally convert to Democrats.

The Party of Lincoln had become one that would have shunned its first President, just as today’s version would probably shun President Reagan.

J.B. Duke spent his last decade setting up another kind of trust, this one to create and endow Duke University from its Trinity foundations with one of the foremost goals of establishing a research-driven nationally recognized medical school.

By the end of WWII, Durham and Duke leaders were at the forefront of pushing a proposal by a UNC-Chapel Hill professor to forge a university park out of southeast Durham pinelands.

It would be solely dedicated to research and development. It’s known today as Research Triangle Park, “triangle” emblematic of the first three of now four universities involved, half of them also based in Durham.

The Park’s tenants are corporations, but employees have always spun off to launch another economic transformation, this time smaller innovation concerns.

By 1987 when time American Tobacco abandoned its plant in Durham for good two years before I would arrive to jumpstart the community’s first destination marketing agency, innovators were already beginning to gravitate to downtown to live and work alongside artists in converted lofts.

Even the city center district of Downtown Durham was receiving positive reviews for sense of place and authenticity long before it began trying to earn them.

Moretti cites research in his book for why innovators like to congregate in Durham besides the fact they like authenticity in their surroundings. “Geography matters for the spread of knowledge, and knowledge quickly dies with distance.”

He cites research that the transference and synergy important for innovative ideas falls off dramatically between zero and 25 miles. In fact Harvard researchers have correlated it to being less than a kilometer away or just over a half mile.

RTP is four miles from downtown Durham and Duke ranges from being adjacent to two miles from downtown.

Similarly, he notes that it is equally important to venture capitalists to be in very close proximity to their investments.

Clearly Raleigh developers and realtors who beginning in 1960 hoodwinked so many newcomers into commuting to Durham by disguising the location of RTP, undermined more than the housing market and philanthropy here.

In his book, Dr. Moretti also explains another reason innovation centers are very geographically compact. Innovation concerns not only locate in clusters for the exchange of ideas, but like Facebook has recently admitted, they also buy other concerns and close them down.

This isn’t to eliminate competition but because the true objective of the transactions was to secure more talent.

Durham leaders, especially those responsible for economic development would do well if they haven’t really read and re-read The New Geography of Jobs, not to reinforce self-perceptions of exceptionalism but to see and understand broader influences.

For example, it may take decades before we know whether downtown revitalized because of shifts in macro-psychographics nationwide including whether it would have happened even without massive subsidies.

But far more important is that Durham learn from its adaptive past and also the past of great cities now in decline.

Other than accredited community destination marketing organizations, economic developers are not known for strategic thinking, especially on the supply-side. Often this is because governing boards and stakeholders limit them to just “shoveling more coal on the fire.”

But for continuing and never-ending economic adaptation to perpetuate, strategic thinking is imperative, especially among elected officials.

It isn’t enough to celebrate today’s accolades, really a credit to preceding generations of Durham leaders. But we can learn from their example and be inspired by their witness.

Judging by how far ahead past economic transformations took root in Durham, today’s leaders need to be focus on 2050 and beyond or risk Durham becoming another Detroit one day.